Crypto Investors Panic And Pull $3B From This Stablecoin In 3 Days

Investors have withdrawn around $3 billion from the stablecoin USDC over the course of three days, according to a blog post by Circle USDC/USD.

The sudden outflows were triggered by the news of the collapse of Silicon Valley Bank SIVB, which held around $3.3 billion of USDC reserves.

As a result, the stablecoin broke its dollar peg and plummeted to $0.88 before returning to $1 on Monday.

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To accommodate USDC redemption, Circle established a new banking relationship with Cross River Bank.

Circle, which owns USDC, processed $3.8 billion in redemptions and created $0.8 billion more of the token from Monday to Wednesday.

This means that investors have withdrawn a total of $3 billion in the past three days alone.

USDC is the second-largest stablecoin, with a market capitalization of $37.6 billion.

The recent outflows follow a warning from U.S. banking regulators last month, which cautioned that crypto-related deposits in banks could be subject to liquidity risks.

Deposits linked to stablecoins were specifically identified as susceptible to volatility during market stress if there is a surge in redemption requests.

According to CoinGecko data, investors have withdrawn a net total of $6 billion from USDC in the past week.

"The events of the past week have impacted the liquidity operations for USDC," Circle stated. "We will continue efforts to add additional transaction banking partners."

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